Many self-insureds and carriers use third party administrators as their front-line adjusters. A set of instructions or guidelines from the actual check-writer is supposed to regulate the TPA's procedures. Anticipating every permutation of every possible situation is impossible, but every set of instructions should include guidance on when and how to use mediation.
Recently, I had the opportunity to review a set of TPA instructions. The TPA was directed to “negotiate settlements of covered claims pursuant to the authority granted by” the contracting party. No further details were provided. However, another section of the agreement spelled out in minute detail a procedure for mediation should a dispute arise between the TPA and its client. The client knew mediation was an important tool for resolving its own disputes, but provided no direction about how to use it to resolve covered claims.
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The regional risk manager of one national account tried to get its local team of TPA workers compensation adjusters to try new dispute resolution techniques, but the adjusters refused. “If they want us to do that, they need to include it in their instructions.”
What Should TPA Instructions Say About Mediation?
Here is some suggested language:
"At appropriate milestones in the life of a claim, adjusters and attorneys should take active steps to initiate mediation and report on the results. These milestones include:
- Approaching trial date
- The injured worker has reached permanent and stationary status
- The injured worker has reached age 61
- 70% of the indemnity reserve has been paid
- Four reserve changes within two years
- The case is more than four years old
"Additionally, claims handlers should attempt to close claims with mediation in:
-- Death cases
-- When the injured worker is acting in pro per (propria persona,
or "for oneself")
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"Adjusters and attorneys are expected to participate in mediation with a good-faith intention to negotiate and resolve pivotal issues."